You have just been advised that your organization is opening an office in Québec. Describe the employer contributions that are specific to the province of Québec, their rates and thresholds where available. (Do not include the organization’s portion of the statutory deductions.)

(LO 3) A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table:

				Budgeted Activity
Activity Cost Pool	Budgeted Cost			Product A			Product B			Product C
Activity 1	$	89,000			7,900			10,900			21,900
Activity 2	$	64,000			8,900			16,900			9,900
Activity 3	$	120,000			4,400			2,900			3,525

How much overhead will be assigned to Product B using activity-based costing?

The following data were drawn from the records of Benson Corporation.

Planned volume for year (static budget)		3,800	units
Standard direct materials cost per unit		2.70	pounds	@	$	1.50	per pound
Standard direct labor cost per unit		2.50	hours	@	$	3.80	per hour
Total expected fixed overhead costs	$	14,440
Actual volume for the year (flexible budget)		4,000	units
Actual direct materials cost per unit		2.40	pounds	@	$	2.10	per pound
Actual direct labor cost per unit		2.80	hours	@	$	3.30	per hour
Total actual fixed overhead costs	$	10,240

1. Prepare a materials variance information table showing the standard price, the actual price, the standard quantity, and the actual quantity.
2. Calculate the materials price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U).
3. Prepare a labor variance information table showing the standard price, the actual price, the standard hours, and the actual hours.
4. Calculate the labor price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U).
5. Calculate the predetermined overhead rate, assuming that Benson uses the number of units as the allocation base.
6. Calculate the fixed cost spending variance. Indicate whether the variance is favorable (F) or unfavorable (U).
7. Calculate the fixed cost volume variance. Indicate whether the variance is favorable (F) or unfavorable (U).

Nash Inc. began operations in January 2015 and reported the following results for each of its 3 years of operations.

2015 $ 260,000 net loss

2016 $ 37,000 net loss

2017 $ 819,000 net income

At December 31, 2017, Nash Inc. capital accounts were as follows.

7% cumulative preferred stock, par value $100; authorized, issued, and outstanding 4,700 shares $ 470,000 Common stock, par value $1.00; authorized 1,000,000 shares; issued and outstanding 818,000 shares $ 818,000 Nash Inc. has never paid a cash or stock dividend. There has been no change in the capital accounts since Nash began operations. The state law permits dividends only from retained earnings.

(a) Compute the book value of the common stock at December 31, 2017.

(b) Compute the book value of the common stock at December 31, 2017, assuming that the preferred stock has a liquidating value of $ 108 per share.

Umbrella Corporation maintains computer equipment and provides consulting services in 10 states and 15 countries. The corporation has a fleet of 4 Corporate jets and 3 Helicoptors and employs 6 full time pilots who receive salary and benefits. The most appropriate way to allocate the total cost of the corporate jets, helicopters, and pilots to individual user departments who travel worldwide to provide consulting service to clients would be:

a. number of employees in each department

b. number of trips taken by each department

c. number of miles flown by each department

d. sales revenue generated by each user department.

Comments:

- Can you explain why Answer C would be the correct answer? I would appreciate it.

- This is a created example that complies with Chegg's honor code.

enCo has the following securities in its investment portfolio on December 31, 2014. All these securities were purchased in 2014.

• 800 shares of Benson Inc. common shares, which cost $50,400 and had a fair value of $52,300 at the end of 2014. JenCo accounts for this investment as available for sale.
• 3,000 shares of Southgate Inc. common stock, which cost $174,000 and had a fair value of $204,000 at the end of 2014. JenCo accounts for this investment as available for sale.
• Oppong Corporation 9% bonds, $600,000 par value, purchased for $648,114; amortized cost was $633,001 at the end of 2014. The market interest rate had been 6% when the bond was acquired, and interest is paid annually at the end of each year.

In 2015, the following transactions occurred:

1. February 1 : A dividend of $2 per share was received on the Benson Inc. shares.
2. May 4 : Sold the Southgate Inc. shares for $199,000.
3. July 12 : Purchased 3,000 shares of United Corporation for $63 per share. JenCo accounts for this investment as held for trading.
4. August 18 : 560 Benson Inc. shares were then sold for $39,610.
5. December 31 : The annual interest was received on the Oppong Corporation bond; interest revenue is measured using the effective-interest method.
6. December 31 : Market values at the end of the year: Benson Inc., $70 per share, Southgate Inc., $71 per share, and United Corporation, $60 per share.

Prepare journal entries for the 2015 transactions and events. The company records dividends, interest income, amortization and holding gains (losses) separately to facilitate income tax preparation. Please make sure your final answer(s) are accurate to the nearest whole number. Enter an appropriate description when entering the transactions in the journal. Dates must be entered in the format dd/mmm (ie. January 15 would be 15/Jan).

What is a package policy? Explain the advantages of a commercial package policy to a business firm as compared to the purchase of separate policies.

The business income (and extra expense) coverage form has a number of policy provisions. Explain the following provisions: Business income loss, Coverage of extra expenses

Define robbery, burglary, safe burglary, and theft.

Identify the major exclusions in the commercial crime coverage form (loss-sustained form).

Question 2

Comparative Balance Sheet
Shiner Corporation
Assets		Dec 31, 1996	Dec 31, 1995
Cash		$37,000	$49,000
Accounts Receivable		$26,000	$36,000
Prepaid Expenses		$6,000	$0
Land		$70,000	$0
Building	$200,000		$0
Accumulated Depreciation	$11,000	$189,000	$0
Equipment	$68,000		$0
Accumulated Depreciation	$10,000	$58,000	$0
Total Assets		$386,000	$85,000
Liabilities and Stockholder Equity
Accounts Payable		$40,000	$5,000
Bonds Payable		$150,000	$0
Common Stock		$60,000	$0
Retained Earnings		$136,000	$20,000
Total Liabilities and Stockholder Equity		$386,000	$85,000

Income Statement
Shiner Corporation
Revenue		$492,000
Operating Expenses	$269,000
Depreciation	$21,000	$290,000
Income before Income Taxes		$202,000
Income Tax Expense		$68,000
Net Income		$134,000

Additional information: During the year Shiner Corporation paid dividends of $18,000. Shiner also issued $150,000 in bonds.    Copy and complete the statement below: Statement of Cash Flows Cash Flow from Operating Activities Net Income Adjustments to reconcile net income to net cash Depreciation Accts Receivable decrease Prepaid Expense increase Accts Payable Increase Net cash provided from Operating Activities Investing Activities Land Purchase Building Purchase Equipment Purchase Financing Activities Dividend payment to shareholders Issuance of Bonds Payable Net Decrease in Cash Cash Jan 1, 1996 Cash Dec 31, 1996

Colonial Pharmaceuticals is a small firm specializing in new products. It is organized into two divisions, which are based on the products they produce. AC Division is smaller and the life of the products it produces tend to be shorter than those produced by the larger SO Division. Selected financial data for the past year is shown below. Divisional investment is as of the beginning of the year. Colonial Pharmaceuticals uses a 9 percent cost of capital and uses beginning-of-the-year investment when computing ROI and residual income. Ignore income taxes.

	AC Division			SO Division
Allocated corp. overhead	$	645		$	1,350
Cost of goods sold		3,290			6,100
Divisional investment		9,900			75,500
R&D		2,450			3,150
Sales		9,800			15,500
SG&A		835			1,080

Required:

a. Compute divisional income for the two divisions.

division income

ac division

so division

b. Calculate the operating margin, which is equivalent to the return on sales, for the two divisions. (Enter your answers as a percentage rounded to 2 decimal places (i.e., 32.16).)

operating margin

AC division %

SQ divison %

c. Calculate ROI for the two divisions. (Enter your answers as a percentage rounded to 2 decimal places (i.e., 32.16).)

Roi

AC divison %

So divison %

d. Compute residual income for the two divisions. (Negative amounts should be indicated by a minus sign.)

residual income for ac division So division

On January 1, 2018, Rick’s Pawn Shop leased a truck from Chumley Motors for a six-year period with an option to extend the lease for three years. Rick’s had no significant economic incentive as of the beginning of the lease to exercise the 3-year extension option. Annual lease payments are $27,000 due on December 31 of each year, calculated by the lessor using a 4% discount rate. Assume that at the beginning of the third year, January 1, 2020, Rick’s had made significant improvements to the truck whose cost could be recovered only if it exercises the extension option, creating an expectation that extension of the lease was “reasonably certain.” The relevant interest rate at that time was 5%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry, if any, at the beginning of the third year for the lessee to account for the reassessment.

5. For the Fourth of July, Ray (manager of Tucker’s Grocery) decided to try to sell some red, white and blue T-shirts with the Berryville logo and fireworks on them. Ray bought 100 of these T-shirts at $3.00 apiece and decided to sell them for $5.00 each. The shirts weren’t as popular as Ray had expected. By July 5, Ray had sold only 30 of the shirts. He decided to mark the shirts down to $4.00 apiece. By July 20, Ray sold 20 more shirts. He then marked the remainder of the shirts down to $3.00 each and sold the rest by July 30.

Part 1 - Please calculate the initial margin, markdown dollars, markdown percent, maintain margin dollars, and maintain margin percent for the T-shirts.

Part 2 – Based on the numbers found in Part 1, would you recommend Ray make a similar purchase next year? If Ray does decide to purchase the t-shirts again next year, would you recommend any changes to his pricing strategy? What and why?

Andretti Company has a single product called a Dak. The company normally produces and sells 89,000 Daks each year at a selling price of $62 per unit. The company’s unit costs at this level of activity are given below:

Direct materials	$	7.50
Direct labor		11.00
Variable manufacturing overhead		2.90
Fixed manufacturing overhead		6.00	($534,000 total)
Variable selling expenses		1.70
Fixed selling expenses		4.00	($356,000 total)
Total cost per unit	$	33.10

A number of questions relating to the production and sale of Daks follow. Each question is independent.

Required:

1-a. Assume that Andretti Company has sufficient capacity to produce 120,150 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 35% above the present 89,000 units each year if it were willing to increase the fixed selling expenses by $150,000. What is the financial advantage (disadvantage) of investing an additional $150,000 in fixed selling expenses?

1-b. Would the additional investment be justified?

2. Assume again that Andretti Company has sufficient capacity to produce 120,150 Daks each year. A customer in a foreign market wants to purchase 31,150 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $4.70 per unit and an additional $15,575 for permits and licenses. The only selling costs that would be associated with the order would be $2.10 per unit shipping cost. What is the break-even price per unit on this order?

3. The company has 900 Daks on hand that have some irregularities and are therefore considered to be "seconds." Due to the irregularities, it will be impossible to sell these units at the normal price through regular distribution channels. What is the unit cost figure that is relevant for setting a minimum selling price?

4. Due to a strike in its supplier’s plant, Andretti Company is unable to purchase more material for the production of Daks. The strike is expected to last for two months. Andretti Company has enough material on hand to operate at 25% of normal levels for the two-month period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 35% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20% during the two-month period.

a. How much total contribution margin will Andretti forgo if it closes the plant for two months?

b. How much total fixed cost will the company avoid if it closes the plant for two months?

c. What is the financial advantage (disadvantage) of closing the plant for the two-month period?

d. Should Andretti close the plant for two months?

5. An outside manufacturer has offered to produce 89,000 Daks and ship them directly to Andretti’s customers. If Andretti Company accepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed manufacturing overhead costs would be reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only two-thirds of their present amount. What is Andretti’s avoidable cost per unit that it should compare to the price quoted by the outside manufacturer?

Assume that Andretti Company has sufficient capacity to produce 120,150 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 35% above the present 89,000 units each year if it were willing to increase the fixed selling expenses by $150,000. What is the financial advantage (disadvantage) of investing an additional $150,000 in fixed selling expenses?

Show less

• Assume that Andretti Company has sufficient capacity to produce 120,150 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 35% above the present 89,000 units each year if it were willing to increase the fixed selling expenses by $150,000. Would the additional investment be justified?

• Assume again that Andretti Company has sufficient capacity to produce 120,150 Daks each year. A customer in a foreign market wants to purchase 31,150 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $4.70 per unit and an additional $15,575 for permits and licenses. The only selling costs that would be associated with the order would be $2.10 per unit shipping cost. What is the break-even price per unit on this order? (Round your answers to 2 decimal places.)

  Show less

  	Break-even price per unit

• The company has 900 Daks on hand that have some irregularities and are therefore considered to be "seconds." Due to the irregularities, it will be impossible to sell these units at the normal price through regular distribution channels. What is the unit cost figure that is relevant for setting a minimum selling price? (Round your answer to 2 decimal places.)

  	Relevant unit cost per unit

• Due to a strike in its supplier’s plant, Andretti Company is unable to purchase more material for the production of Daks. The strike is expected to last for two months. Andretti Company has enough material on hand to operate at 25% of normal levels for the two-month period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 35% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20% during the two-month period. (Round number of units produced to the nearest whole number. Round your intermediate calculations and final answers to 2 decimal places. Any losses/reductions should be indicated by a minus sign.)
  
  a. How much total contribution margin will Andretti forgo if it closes the plant for two months?
  b. How much total fixed cost will the company avoid if it closes the plant for two months?
  c. What is the financial advantage (disadvantage) of closing the plant for the two-month period?

  Show less

  	Forgone contribution margin Total avoidable fixed costs

• Due to a strike in its supplier’s plant, Andretti Company is unable to purchase more material for the production of Daks. The strike is expected to last for two months. Andretti Company has enough material on hand to operate at 25% of normal levels for the two-month period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 35% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20% during the two-month period. Should Andretti close the plant for two months?

  Show less

• An outside manufacturer has offered to produce 89,000 Daks and ship them directly to Andretti’s customers. If Andretti Company accepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed manufacturing overhead costs would be reduced by 30%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only two-thirds of their present amount. What is Andretti’s avoidable cost per unit that it should compare to the price quoted by the outside manufacturer? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

  Show less

  	Avoidable cost per unit

Elizabeth College, a small private college, had the following transactions in fiscal year 2017.

1.	Gross tuition and fees revenue totaled $5,600,000. Tuition waivers and scholarships of $346,000 were granted. Of the tuition waivers granted $276,400 was for teaching assistantships, which is an instruction expense.
2.	Students received tuition refunds of $101,670.
3.	During the year the college received $1,891,000 cash in unrestricted private gifts, $575,200 cash in temporarily restricted grants, and $1,000,000 in securities for an endowment.
4.	A pledge campaign generated $1,090,000 in pledges. Of the amount pledged, $573,200 was for the capital construction campaign, $300,000 was for endowments, and the remainder of the pledges had no purpose restrictions. The pledges will all be collected in 2018.
5.	Auxiliary enterprises provided goods and services that generated $94,370 in cash.
6.	Collections of tuition receivable totaled $5,080,000.
7.	Unrestricted cash of $1,000,000 was invested.
8.	The college purchased computer equipment at a cost of $10,580.
9.	During the year the following expenses were paid:

Instruction	$	3,566,040
Academic support		1,987,000
Student services		87,980
Institutional support		501,130
Auxiliary enterprises		92,410

10.	Instruction provided $450,000 in services related to the temporarily restricted grant recorded in transaction 3.
11.	At year-end, the allowance for uncollectible tuition and fees was increased by $7,200. The fair value of investments had increased $11,540; of this amount, $3,040 was allocated to permanently restricted net assets, the remainder was allocated to unrestricted net assets. Depreciation on plant and equipment was allocated $34,750 to instruction, $41,000 to auxiliary enterprises, and $12,450 to academic support.
12.	All nominal accounts were closed.

a-1.	Prepare journal entries to record the foregoing transactions for the fiscal year ended June 30, 2017. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

The following are BAC Bhd.’s year end statement of financial position and statement of profit and loss for 2016 and 2017:
2017 ($) 2016 ($)
Non Current Assets:   
Gross Non Current assets 317,503 232,179
Less accumulated depreciation 54,045 34,187
Net Non Current assets 263,458 197,992
Current Assets:
ICLBAT/JANUARY2019
7

Cash and equivalents 208,323 102,024
Accounts receivable 690,294 824,979
Inventories 942,374 715,414
Total Current Aassets 1,840,991 1,642,417
Total Assets 2,104,449 1,840,409
Non Current Liabilities   
Long term debt 410,769 372,931
Total Non Current Liabilities 410,769 372,931
Current Liabilites   
Short term borrowings 288,798 296,149
Accounts payable 636,318 414,611
Accruals 106,748 103,362
Total Current Liabilities 1,031,864 814,122
Total Liabilities 1,442,633 1,187,053
Shareholders’ Equity   
Common stock (100,000 shares) 550,000 550,000

Retained earnings 111,816 103,356
Total Shareholders’ Equity 661,816 653,356
Total Liabilities and Shareholders’ Equity 2,104,449 1,840,409






  
ICLBAT/JANUARY2019
8


2017 ($) 2016 ($)
Sales 2,325,967 2,220,607 (-) Cost of goods sold 1,869,326 1,655,827 Other expenses 287,663 273,870 Total operating costs excluding depreciation and amortization 2,156,989 1,929,697 Depreciation and amortization 25,363 26,341 Total operating costs 2,182,352 1,956,038 EBIT 143,615 264,569 (-) Interest expense 31,422 13,802 EBT 112,193 250,767 (-) Taxes (30%) 33,658 75,230 Net income 78,535 175,537

Related items:
2017 2016 Total dividends paid $70,075 $150,000 Stock price per share $15.60 $21.80

Required:
(a) Calculate the after tax operating income (i.e. after-tax EBIT) for 2016 and 2017.

(b) Calculate the net working capital (NWC) that is supported by non-free sources for 2016 and 2017, and the changes in NWC between these two years.

(c) What is free cash flow (FCF)? Calculate the FCF for 2017. Is a negative FCF always a bad sign?

(d) Calculate the following for the company for 2017: (i) Earnings per share (1 mark) (ii) Dividends per share (1 mark) (iii) Book value per share (1 mark) (Total: 15 marks)